Car supermarket chain Carcraft goes bankrupt
The UK's seventh largest used car retailer Carcraft Group has gone bankrupt, after unsuccessful efforts to sell the loss-making company.
The Group’s finance arm, All In One Finance, which is regulated by the Financial Conduct Authority (FCA), is expected to also be placed into administration shortly, once FCA clearance has been obtained.
The company announced its closure, after an attempted sales process started in February 2015 was unsuccessful.
Daniel Smith and Joe McLean, both partners at Grant Thornton UK LLP, have been appointed as administrators.
The firm had an annual turnover of £120m, selling 12,000 cars a year across its ten forecourts at an average price of £9,000 per vehicle. However administrators said the business was “heavily loss-making,” witnessing annual shortfalls of around £8m for a number of years.
According to the administrators the group suffered from poor market reputation, lack of investment, a high cost base, expensive loan note financing and an insolvent balance sheet all of which have hindered investment. The Group also has legacy PPI claims.
Tarun Mistry, Automotive Advisory Partner at Grant Thornton, commented: “The business model has failed to evolve with the changes in the used vehicle remarketing sector and regulatory environment. Overall, this sector is still vibrant and represents a significant opportunity for the appropriate operating model to benefit from the growing and changing used vehicle market.”
Carcraft will cease trading and all employees have been informed and have been made redundant. All employees were paid on 30 April 2015 for the month of April.
Due to the nature of the situation, Carcraft customers with Drive Happy Plans (DHP), a warranty, MOT, servicing and roadside assistance product will no longer be covered and all elements of the policy will not be fulfilled by Carcraft. Communication to this effect has been issued to customers.
Daniel Smith commented: “With great regret a conclusion was reached that it is no longer viable to keep Carcraft in operation. In order to prevent further losses it has been agreed with management and creditors to cease operations with immediate effect.
“Carcraft will retain a skeleton staff to assist with the realisation of assets. In the event there are any approaches from interested parties post appointment we will react to these accordingly. It is our intention to explore with an alternative provider whether they could provide the roadside assistance element of the DHP cover at a favourable rate to former customers.”